Who is responsible for added costs resulting from changes in the law?

In contract management, particularly concerning changes in the law, the responsibility for added costs typically falls on both parties—usually the contractor and the government agency. This shared responsibility recognizes that both the contractor and the government are affected by legal changes during the contract's execution.

The rationale behind this approach is based on fostering collaboration and communication. Instead of placing the burden solely on one party, both the contractor and the agency must work together to understand the implications of the legal changes and determine how to address the added costs effectively. This collaborative resolution helps ensure that the project can continue smoothly while adapting to the new legal context, promoting fairness and maintaining a good working relationship between the parties involved.

For instance, if a new labor law increases wages that affect the contractor's costs, the contractor cannot simply bear that cost alone without impacting the contract's viability. Simultaneously, the government agency must be aware of how such changes affect their budget and project timelines. This encourages a problem-solving mindset rather than an adversarial one, which is essential for successful contract management.